Creating a Separation Agreement
In an ideal world, every marriage would be happy. But, we all know that is not the reality. Couples may decide to separate for many reasons. As the comedian Louie C.K. said, “Divorce is always good news. I know that sounds weird, but it’s true because no good marriage has ever ended in divorce.” Divorce can be extremely difficult and painful. But, after the divorce, both parties will be free from a bad marriage.
Here are some tips on how to craft a separation agreement. The separation agreement is a private contract between the spouses. It can determine child custody, alimony, and property distribution. It will also protect the rights of each party. The best separation agreements are a compromise that lay the groundwork for how the parties will go forward. They plan for everything that could go wrong. Here are some things every separation agreement should consider.
Child custody and support.
If the couple has children, child custody and support should be handled. The couple should figure out who will have custody. Maybe one parent will have the children most of the time, while the other parent gets them sometimes. This is called primary custody with visitation. Maybe the parents have the children equally. This is joint custody. Sometimes one parent will even take some of the kids all the time, while the other parent takes the other kids. This is called split custody.
It’s important to figure out exactly when each parent will have the children. What about holidays? Summer vacation? Even if the spouses are separating amicably, it’s important to have a fallback plan in case disagreements arise later on.
As for support, it may be necessary if one parent will have primary custody or if one parent makes a lot more than the other. The separation agreement is privately negotiated between the parties. But child custody is always open to modification by the courts. This is because the State of North Carolina protects child welfare. So, if the agreement is unfair in some way, one party can ask the Court to modify it.
There are child support calculators and guidelines available online. The parties can use them to decide what kind of child support would be fair to both parents, and to the children.
Alimony may be included in the agreement, or it may be waived. Court-ordered alimony depends on a supporting/dependent spouse relationship during the marriage. The Court will also take into consideration whether one spouse cheated, how long the marriage was, and each party’s relative ability to earn money.
But the separation agreement is private. The Court is not involved, so the parties can do whatever they want. However, the parties can look at what the Court might decide as a guide.
If the marriage was short, but one spouse made a lot of money and the other spouse made very little, the spouses might consider rehabilitative alimony. This alimony arrangement will be temporary and provides funds for education, so that the spouse who earned less can become more educated and pursue a higher-earning career.
If the marriage was long, and one spouse worked while the other stayed home taking care of the house and raising children, the working spouse should pay more alimony for a longer period of time.
If the parties agree not to have alimony, they should waive their rights to it. That way, neither party can sue for alimony when they had both agreed otherwise.
The parties can use the separation agreement to decide how to divide everything they own. They can decide which party will stay in the marital home, or whether they will sell it. The Parties can decide what to do with the cars. They can also divide assets like stocks, bonds, retirement accounts, pensions, bank accounts, etc. The separation agreement can also settle debts.
If the marriage was short, it’s a good idea for each spouse to waive their rights in the other spouse’s assets. If the party gets divorced in their 20’s after being married a few years and agrees to divide a 401k, they may regret it when they’re 70, remarried, and need the money!
The most important thing to remember is that everything owned jointly by the couple needs to be separated. The car should be re-titled in the name of the party keeping it. So should the deed to house, the mortgage, insurance policies, and any bank accounts.
Other important things to consider.
The separation agreement is a private contract. That means the couple can agree on whatever they want as long as it’s legal. There are a few things that every separation agreement should include.
- A section stating that the separation agreement is not an agreement to get a divorce. This sounds strange: isn’t the point of separation to obtain a divorce? But, agreeing to divorce is actually against NC law. The point of the separation agreement is not to obtain a divorce. It’s to equitably divide the couple’s property and interests.
- Full disclosure. It’s very important that both spouses fully disclose all of their assets (and debts!). This way each party knows exactly what the other has, so that everything can be divided fairly. If one party conceals something from the other, it can make the entire agreement invalid!
- Waivers. The parties might waive their rights to alimony and equitable distribution by the courts. If they do so, it bars them from creating a lawsuit later. They should waive interest in each other’s estates as well.
- A clause not to bother each other. If the parties separate amicably, they can of course keep in touch and see each other if they wish. But, the separation may be contentious. In that case, it’s important for the parties to include clauses stating that they should be free to work and live free from interference from each other.
- Legal representation. The parties can create an agreement with or without counsel. But, if one party obtains counsel to draft the agreement, that attorney only represents one spouse, not both. Attorneys have a duty to be fair and operate in good faith. But, they also have a duty to zealously advocate for their client, not for both parties. It may be a good idea for both parties to retain independent counsel. One lawyer will draft the agreement, and the other will review it and suggest any changes.
Separation and divorce are hard, but a separation agreement can make things easier. It settles everything for the separating couple and allows each party to move on. See the attached Crews Separation Agreement Checklist for more information.